Affirmative Action and Fair School Choice Design for Minority Students

Abstract Affirmative Action and Fair School Choice Design for Minority Students Muntasir Chaudhury Ph.D. Concordia University, 2023 In the first main chapter of this thesis we propose three basic welfare axioms for school choice mechanisms with an affirmative action policy: non-wastefulness, respecting the affirmative action policy, and minimal responsiveness, and show that none of the previously proposed mechanisms satisfy all three welfare axioms. Then we introduce a new mechanism which satisfies the three welfare axioms. This mechanism issues immediate acceptances to minority students for minority reserve seats and otherwise it is based on deferred acceptance. We analyze the fairness and incentive properties of this newly proposed affirmative action mechanism. In the second main chapter we investigate school choice mechanisms with an affirmative action policy that have appealing responsiveness properties to changes in the strength of the affirmative action policy. We present two intuitive mechanisms which satisfy stringent responsiveness criteria and are the first ones to be studied with such properties. One is fully responsive and results in a welfare improvement for minority students when the minority reserves are increased, while the other one only ensures a welfare improvement when moving to an affirmative action policy. We study further properties of these two school choice mechanisms which suggest trade-offs. In the third main chapter we use a stylized model to explore whether the choice of the matching mechanism in school choice has an impact on the degree of school segregation. We find that the celebrated Deferred Acceptance and the well-known Top Trading Cycle mechanisms both lead to complete segregation, while the Immediate Acceptance mechanism results in less segregation, even though it has often been replaced by the Deferred Acceptance mechanism on the recommendation of theorists. Our results suggest that in order to reduce school segregation, despite their manipulability, the use of matching mechanisms that rely more on student preferences than schools’ priority rankings should be reconsidered. We also study practically relevant special cases which indicate that standardized entrance exams do not aggravate the segregation outcomes but the funding and quality gap among schools do